2003 (3) TMI 783 - AT - FEMA

Tribunal Overturns Penalty; Appellant Cleared of Export Proceeds Contravention Due to Realized Payments Via Banking Channels.

Diamart India Ltd. Versus Director of Enforcement

Diamart India Ltd. Versus Director of Enforcement - TMI Issues:Contravention of section 18(2) and 18(3) of FERA, 1973 - Realization of export proceeds - Imposition of penalty.Analysis:The appeals arose from an adjudication order holding a firm and its partners guilty of contravening section 18(2) and 18(3) of FERA, 1973, with a penalty imposed on them. The charge was failing to realize export proceeds in relation to 10 GR forms totaling US $5,36,879.76. Despite claims of realization, discrepancies arose regarding the confirmation of actual realization by the negotiating bank and the bank where FIRCs were deposited. The adjudication officer found the firm and its directors guilty due to lack of evidence and non-compliance with RBI regulations. The firm's defense included delays due to currency crises and correspondence with RBI for time extension, supported by certificates of Foreign Inward Remittances. However, the adjudicator dismissed these arguments, emphasizing the lack of specific details in the FIRCs and non-confirmation by the banks, leading to the conclusion of pending realization and contravention of FERA sections.The appellant contended that the adjudicator erred in not considering the certificates of Foreign Inward Remittances issued by the bank, which indicated the amounts due from foreign buyers. The appellant argued that delays were due to external factors and correspondence with RBI for extension. Specific details of remittances from different parties were highlighted, showing a match between amounts due and remitted. The appellant also explained the choice of the bank for remittances to avoid credit limit issues. The appellant criticized the technical approach of the adjudicator, pointing out that the source of remittances should not be the sole basis for adverse findings.In response, the respondent's counsel argued that the absence of GRI numbers in remittances justified the adjudicator's decision on outstanding amounts. However, the appellate tribunal disagreed, noting that the entire amount due had been realized through proper banking channels. Consequently, the penalty imposition was deemed unjustified, leading to the setting aside of the impugned order. The appeals were allowed in favor of the appellant, overturning the penalty decision.